In the current regulatory and legislative environment, compliance in the global iGaming sector has arguably never been so important. 

As governments around the world look to capitalise on the increased demand for online gambling products, new regulatory regimes have been introduced and operators have to adapt to the new environment. 

One company that has been at the forefront of this evolution is Soft2Bet, a company that knows how to create strong B2C brands in a saturated, highly challenging market holding 19 licenses in key European markets. 

As David Yatom Hay, the company’s General Counsel, explains to SBC News, compliance is not a check box exercise for Soft2Bet. 

“It’s a core part of our operational DNA,” Yatom said. “We built a very qualified compliance team that monitors our operations very closely and ensures we operate very strictly. Our main strength is that in our operations, we have an ability to strongly blend our regulatory oversight and technological adaptations.”

A core part of this fusion is the cross-functional collaboration between teams across the Soft2Bet group. The compliance function works closely with the product and dev teams to ensure that robust AML, KYC and other compliance tools are interwoven into the platform. 

Key to this collaboration is ensuring that it is agile enough to meet regulatory requirements in each and all jurisdiction that Soft2Bet is in. 

Yatom explained: “We actively monitor player behaviour on our platform to identify edge cases that raise AML triggers. We build our system accordingly. We built it from the ground up to allow us to implement those tools everywhere we go and to make sure it’s adaptable to any jurisdiction. 

“If you have a platform and you don’t have the internal collaboration that allows you to make changes quickly, you will be breaching regulations very quickly.”

Soft2Bet’s compliance delivers financial benefits

With increased interest from internal and external stakeholders for operators and suppliers to be cautious on their compliance strategies, it is difficult to argue that compliance in-and-of-itself is an inherent competitive advantage. All licensees in any jurisdiction will have compliance tools and functions within their businesses. 

But Yatom outlines that those who use compliance smartly will reap the financial benefits which can then create long-term value and advantages. 

He explained that as Soft2Bet remains compliant, it can process close to 100% of its revenues – as it comes from legitimate sources – which benefits its margins. 

That way, compliance costs are reduced, profits are larger and those profits can then be reinvested into technology, innovation and marketing. 

But if one gets it wrong, revenue has to be put to one side.

“You might have 100% of revenues generated, but if you don’t pay attention to the risks, that 100% is diluted,” Yatom noted. “By the way, you still pay for this. When you engage with a service provider, you still pay for those services even if the revenue from the bet is forfeited because of those risks. 

“When you pay attention to those risks and make sure the funds are legitimate, then 100% of those revenues are actually reflected in your profit. That’s important from a financial and planning perspective. It keeps players happy; it keeps us happy.”

These considerations have been put into the development of Soft2Bet’s products.

“Our system taps into a lot of data points that we collect in gameplay and from identification features to create a triggering system that would identify those more risky and less favourable players,” Yatom added. “That’s a competitive advantage and those companies who understand and implement these systems correctly will benefit long-term.”

Licensee-regulator relations see improvements

Perhaps one of the most important relationships that a licensed business can have is with the regulator. Ensuring that open lines of communication are available and that dialogue takes place is crucial to maintaining a healthy environment. 

If regulations are too stringent then operators tend to leave, opening the door for unlicensed actors to take the revenue without any taxation. 

If the regulations are too operator-friendly, trust in the regulator can be damaged. So it’s a fine balance, which requires dialogue. 

Yatom outlined that, while he enjoys fruitful conversations with regulators now, it has not always been the case. 

“For a long time they were segregated and secluded from operators. However we have seen a massive change in the last few years. If you have the opportunity to sit down with the regulator and understand their needs, it helps with future planning. 

“Some regulators also heed our advice on how we see the market and if any regulations need changing or are endangering our operations. They ask things like how can we make the engagement more efficient, and sometimes they even take our consideration in relation to taxation and what will be the balance between what’s profitable and what’s sustainable as a business.”

Remaining compliant on a global scale

As Soft2Bet operates in Europe, the Nordics and North America, it must have strong relations with lots of regulators. But it also requires lots of agility in its platform to meet the demands of such varied levels of regulation when it comes to things such as AML, KYC and RG. 

As such, Soft2Bet treats the EU’s AML general guidelines as a starting point, but has built in agility to dial that up or down as required. 

“Each jurisdiction might add a certain layer to AML that requires you to adjust the system across multiple jurisdictions,” said Yatom. “This requires a lot of attention because you need to monitor each individual, specific piece of regulation, not just the European guidelines.”

Innovating to adapt

As Yatom’s time with SBC News drew to a close, attention quickly focused on the future. With increased regulation, particularly regarding marketing restrictions and tax hikes, it is easy to think that the sector faces a difficult future. 

In the short term, Yatom agreed with the hypothesis, noting that countries identify iGaming as a source of income, so they want to impose more boundaries for entry for people in order to generate revenues.

Yatom noted that tax rises must be finely balanced so that governments can still generate revenues without disincentivising operators to leave the regulated market. He referenced playing SimCity in his youth, and noticing that when taxes were high, businesses in his virtual city left, leaving the area without tax revenues despite the good intentions.

In this environment, Soft2Bet aims to remain compliant in all its markets, while investing in technology to create more competitive advantage. 

“We try to be a bit more innovative in order to adapt to these hinges and restrictions,” Yatom closed. “So where we lack the ability to promote or advertise our business, we become more innovative.